In April my company, YourSigma, merged with another startup in the Tech Wildcatters 2014 class, a company called Upswing.
Upswing is a platform that colleges use to tackle attrition. Community colleges lose on average45% of freshman in the first year, and 4-year colleges lose them at an averagerate of 35%. Depending on the cost of tuition, this amounts to a huge loss in revenue – $7M annually. Upswing provides colleges 1) a online platform for their on-campus learning center and tutors, 2) a global marketplace of outside tutors available to students 24/7, and 3) actionable analytics. See here: upswingmyschool.com
So this post is about how the merger went down. There were 14 companies in the Tech Wildcatters. YourSigma and Upswing were the two education technology companies, if you don’t count PledgeCents, a competitor to Donorschoose.org.
Chris and I got a tour of the Upswing platform, and gave them one of ours. Alex Pritchett and Melvin Hines, the Upswing team before we became part of it, had coaxed a very sophisticated albeit somewhat ragtag platform usingdevelopers they foundin India through elance.com. As impressive as their ability to bootstrap a product was their success at selling their vision, and selling it for money. Coming into the Tech Wildcatters accelerator, they had contracts with 3 community colleges in North Carolina. In fact, they had sold one of their customers on a prototype they had built on WordPress alone.
If you’ve read Eric Ries’ “Lean Startup”, then you’ll know what I mean when I say that Alex and Melvin had delivered a minimum viable product (MVP), and it validated a real market opportunity. Colleges were going to pay for this. Meanwhile, Chris and I had built a very optimized (prematurely?) and well-designed application for businesses that showed us plenty of interest, but not as of then, the money.
Acouple weeks into the program, we were out with a bunch of our new friends in the accelerator. As an aside, I’m glad wepicked an accelerator in which the teams were all transplants – from Brazil, Croatia, Houston, Slovenia, and so on – because we were forced to enjoy each others company socially more than we would have if we had other old friendships and cliques in town. So, during a night out, the Upswing guys mentioned a merger in half-jest. Later the sameweek, we passed the joke around again, sober. And that’s it. Soon after, we seriously debated it: what we had to gain and what would be the terms.
Upswing had discovered and validated a market opportunity and had executed – meaning they hadan impressive sales pipeline thanks to help fromtheex-CFO of the NC community college system, who was also an advisor to their company. Chris Webb and I had product expertise, and a platform that would integrate with little redundancy andprovide LMS (learning management system) features we could upsell to colleges.
The four of us would fill out the executive team of the new company. Therefore, it was equally important that we happened to get along great inside and outside the office, shared a passion for education and a similarwork ethic – that is, before we merged, we noticedthat we were among the few teams(shout out here to PledgeCents) that worked late and spent a lot less time at the foosball table. See a prior post about why that mattered to us.
To wrap this up, we hammered out all the logistics and signed all the documents so that the merger was done in the next couple weeks, leaving us the second half of the program to go full-steam ahead. Personally, I was a little sad that I wouldn’t be pitching every Wednesday (pitch practice to an auditorium of mentors/investors), but Melvin, CEO, carried the flag and killed it on Pitch Day at the Granada Theater. Looking forward to things to come.